Breaking Down Treasury’s Sh4.49T Draft Budget: Executive Scoops 59.8%

The National Treasury is flexing its financial muscles with a Sh4.485.7 trillion budget for the 2025/26 financial year—a serious jump from last year’s Sh3.94 trillion. The draft Budget Policy Statement has all the details, from funding the National Government to slicing the pie for counties and the three Arms of Government. But where’s all this cash going?

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The National Government gets the lion’s share at Sh2.7 trillion (up from Sh2.3 trillion last year). The Executive will take home a whopping Sh2.68 trillion—59.8% of the budget. Parliament will get Sh42.4 billion, while the Judiciary pockets Sh25.6 billion. Meanwhile, County Governments get a bit of a haircut, with their allocation trimmed to Sh405 billion from Sh410 billion.

Forget carrying forward last year’s expenses. The government is bringing in zero-based budgeting, which means every single expenditure has to prove its worth. No freeloaders allowed!

The National Treasury is aiming high with revenue projections of Sh3.516 trillion, which is 18.2% of GDP (up from Sh3.060 trillion). Ordinary revenue is also climbing to Sh3.018 trillion, thanks to some tax reforms designed to widen the tax net and ensure everyone pays their dues.

Here’s the breakdown of the Sh4.329.3 billion in planned expenditure: Recurrent expenses: Sh3,076.9 billion. Development projects: Sh804.7 billion. County transfers: Sh442.7 billion. Emergency fund: A modest Sh5 billion.

The fiscal deficit will narrow slightly to Sh759.4 billion (3.9% of GDP). To plug this gap, the government plans to borrow Sh213.7 billion externally and Sh545.8 billion domestically.

To keep things smooth, Treasury is introducing a value-chain approach to resource allocation. Translation: no duplication, no wastage, and lots of efficiency. Ministries and agencies have their homework cut out, with zero-based budgeting as their guide and Vision 2030 as their ultimate goal.

Got opinions? Treasury wants to hear them! Share your thoughts on the draft Budget Policy Statement by January 21, 2025, at bps@treasury.go.ke. Don’t miss your chance to shape how billions get spent!

Here’s what it means for you:

1. If the government implements new tax reforms or increases existing ones, you might see a rise in the cost of goods and services.
2. If the budget prioritizes sectors like healthcare, education, or infrastructure, you could potentially benefit from better public services.
3. The government’s focus on the Bottom-Up Economic Transformation Agenda (BETA) aims to stimulate economic growth, which could lead to job creation and increased opportunities.
4. The large allocation to the Executive might lead to increased government spending in various areas, which could have both positive and negative consequences depending on how the funds are utilized.

Source; The National Treasury.

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